The Automobile Association says South Africa’s fuel prices are set to climb in June in a “dramatic reversal of April's chaotic fuel market”.
Commenting on unaudited month-end fuel price data released by the Central Energy Fund, the AA said petrol was expected to show a “hefty increase” of up to R1,18 a litre, with increases of around 22 cents a litre for diesel and 41 cents a litre for illuminating paraffin.
"The global lockdowns under COVID-19 saw fuel demand plummet. The resulting oversupply left storage bunkers full, with the extraordinary outcome that oil prices in the US briefly dipped below zero," the AA said.
The Association noted crude oil prices used to calculate South Africa's fuel prices had “fallen in lockstep with the reduction in demand”, but were now “inching up” as economic activity began to ramp up on a global scale.
"This is not unexpected, and South Africans should remember that the fuel price is currently around four rand per litre lower than it was before the COVID-19 crisis hit. Fortunately, the rand has strengthened during May, which has helped insulate the country from some of the rise," the AA noted.
Interestingly, the AA also advised that despite the “moderate” price rise for diesel, motorists “may encounter shortages of diesel in the short term”.
According to the South African Petroleum Industry Association (SAPIA), the “economy has recovered more rapidly than expected, leading to a dramatic increase in the demand for diesel which refineries are currently not able to meet".
The AA noted some rationing of diesel was already taking place, but that SAPIA said it expected diesel supply to “normalise” once both refineries in Durban reached on-spec production, which was anticipated to be at the end of May.
"We advise motorists to be pragmatic and anticipate fuel prices slowly returning to their previous levels over the medium to long term. It would be prudent to budget accordingly," the AA concluded.
Original article from Car